To amend the Federal Election Campaign Act of 1971 to clarify when organizations described in section 527 of the Internal Revenue Code of 1986 must register as political committees, and for other purposes.

February 2, 2005

Mr. MCCAIN (for himself, Mr. FEINGOLD, Mr. LOTT, Mr. LIEBERMAN, Mr. SCHUMER, Ms. SNOWE, Ms. COLLINS, and Mr. SALAZAR) introduced the following bill; which was read twice and referred to the Committee on Rules and Administration

To amend the Federal Election Campaign Act of 1971 to clarify when organizations described in section 527 of the Internal Revenue Code of 1986 must register as political committees, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `527 Reform Act of 2005'.

SEC. 2. TREATMENT OF SECTION 527 ORGANIZATIONS.

(a) Definition of Political Committee- Section 301(4) of the Federal Election Campaign Act of 1971 (2 U.S.C. 431(4)) is amended by striking the period at the end of subparagraph (C) and inserting `; or' and by adding at the end the following:

`(D) any applicable 527 organization.'.

(b) Definition of Applicable 527 Organization- Section 301 of the Federal Election Campaign Act of 1971 (2 U.S.C. 431) is amended by adding at the end the following new paragraph:

`(27) APPLICABLE 527 ORGANIZATION- For purposes of paragraph (4)(D)--

`(A) IN GENERAL- The term `applicable 527 organization' means a committee, club, association, or group of persons that--

`(i) is an organization described in section 527 of the Internal Revenue Code of 1986, and

`(ii) is not described in subparagraph (B).

`(B) EXCEPTED ORGANIZATIONS- Subject to subparagraph (D), a committee, club, association, or other group of persons described in this subparagraph is--

`(i) an organization described in section 527(i)(5) of the Internal Revenue Code of 1986,

`(ii) an organization which is a committee, club, association or other group of persons that is organized, operated, and makes disbursements exclusively for paying expenses described in the last sentence of section 527(e)(2) of the Internal Revenue Code of 1986 or expenses of a newsletter fund described in section 527(g) of such Code, or

`(iii) an organization which is a committee, club, association, or other group of persons whose election or nomination activities relate exclusively to--

`(I) elections where no candidate for Federal office appears on the ballot, or

`(II) one or more of the purposes described in subparagraph (C).

`(C) ALLOWABLE PURPOSES- The purposes described in this subparagraph are the following:

`(i) Influencing the selection, nomination, election, or appointment of one or more candidates to non-Federal offices.

`(ii) Influencing one or more State or local ballot initiatives, State or local referenda, State or local constitutional amendments, State or local bond issues, or other State or local ballot issues.

`(iii) Influencing the selection, appointment, nomination, or confirmation of one or more individuals to non-elected offices.

`(D) SECTION 527 ORGANIZATIONS MAKING CERTAIN DISBURSEMENTS- A committee, club, association, or other group of persons described in subparagraph (B)(ii) or (B)(iii) shall not be considered to be described in such paragraph for purposes of subparagraph (A)(ii) if it makes disbursements aggregating more than $1000 during any calendar year for any of the following:

`(i) A public communication that promotes, supports, attacks, or opposes a clearly identified candidate for Federal office during the 1-year period ending on the date of the general election for the office sought by the clearly identified candidate occurs.

`(ii) Any voter drive activity (as defined in section 325(d)(1)).'.

SEC. 3. RULES FOR ALLOCATION OF EXPENSES BETWEEN FEDERAL AND NON-FEDERAL ACTIVITIES.

(a) In General- Title III of the Federal Election Campaign Act of 1971 (2 U.S.C. 431 et seq.) is amended by adding at the end the following:

`SEC. 325. ALLOCATION AND FUNDING RULES FOR CERTAIN EXPENSES RELATING TO FEDERAL AND NON-FEDERAL ACTIVITIES.

`(a) In General- In the case of any disbursements by any political committee that is a separate segregated fund or nonconnected committee for which allocation rules are provided under subsection (b)--

`(1) the disbursements shall be allocated between Federal and non-Federal accounts in accordance with this section and regulations prescribed by the Commission, and

`(2) in the case of disbursements allocated to non-Federal accounts, may be paid only from a qualified non-Federal account.

`(b) Costs To Be Allocated and Allocation Rules- Disbursements by any separate segregated fund or nonconnected committee for any of the following categories of activity shall be allocated as follows:

`(1) 100 percent of the expenses for public communications or voter drive activities that refer to one or more clearly identified Federal candidates, but do not refer to any clearly identified non-Federal candidates, shall be paid with funds from a Federal account, without regard to whether the communication refers to a political party.

`(2) At least 50 percent of the expenses for public communications and voter drive activities that refer to one or more clearly identified candidates for Federal office and one or more clearly defined non-Federal candidates shall be paid with funds from a Federal account, without regard to whether the communication refers to a political party.

`(3) At least 50 percent of the expenses for public communications or voter drive activities that refer to a political party, but do not refer to any clearly identified Federal or non-Federal candidate, shall be paid with funds from a Federal account, except that this paragraph shall not apply to communications or activities that relate exclusively to elections where no candidate for Federal office appears on the ballot.

`(4) At least 50 percent of the expenses for public communications or voter drive activities that refer to a political party, and refer to one or more clearly identified non-Federal candidates, but do not refer to any clearly identified Federal candidates, shall be paid with funds from a Federal account, except that this paragraph shall not apply to communications or activities that relate exclusively to elections where no candidate for Federal office appears on the ballot.

`(5) At least 50 percent of any administrative expenses, including rent, utilities, office supplies, and salaries not attributable to a clearly identified candidate, shall be paid with funds from a Federal account, except that for a separate segregated fund such expenses may be paid instead by its connected organization.

`(6) At least 50 percent of the direct costs of a fundraising program or event, including disbursements for solicitation of funds and for planning and administration of actual fundraising events, where Federal and non-Federal funds are collected through such program or event shall be paid with funds from a Federal account, except that for a separate segregated fund such costs may be paid instead by its connected organization.

`(c) Qualified Non-Federal Account- For purposes of this section--

`(1) IN GENERAL- The term `qualified non-Federal account' means an account which consists solely of amounts--

`(A) that, subject to the limitations of paragraphs (2) and (3), are raised by the separate segregated fund or nonconnected committee only from individuals, and

`(B) with respect to which all other requirements of Federal, State, or local law are met.

`(2) LIMITATION ON INDIVIDUAL DONATIONS-

`(A) IN GENERAL- A separate segregated fund or nonconnected committee may not accept more than $25,000 in funds for its qualified non-Federal account from any one individual in any calendar year.

`(B) AFFILIATION- For purposes of this paragraph, all qualified non-Federal accounts of separate segregated funds or nonconnected committees which are directly or indirectly established, financed, maintained, or controlled by the same person or persons shall be treated as one account.

`(3) FUNDRAISING LIMITATION- No donation to a qualified non-Federal account may be solicited, received, directed, transferred, or spent by or in the name of any person described in subsection (a) or (e) of section 323.

`(d) Definitions- For purposes of this section--

`(1) VOTER DRIVE ACTIVITY- The term `voter drive activity' means any of the following activities conducted in connection with an election in which a candidate for Federal office appears on the ballot (regardless of whether a candidate for State or local office also appears on the ballot):

`(A) Voter registration activity.

`(B) Voter identification.

`(C) Get-out-the-vote activity.

`(D) Generic campaign activity.

Such term shall not include any activity described in subparagraph (A) or (B) of section 316(b)(2).

`(2) FEDERAL ACCOUNT- The term `Federal account' means an account which consists solely of contributions subject to the limitations, prohibitions, and reporting requirements of this Act. Nothing in this section or in section 323(b)(2)(B)(iii) shall be construed to infer that a limit other than the limit under section 315(a)(1)(C) applies to contributions to the account.

`(3) NONCONNECTED COMMITTEE- The term `nonconnected committee' shall not include a political committee of a political party.'.

(b) Reporting Requirements- Section 304(e) of the Federal Election Campaign Act of 1971 (2 U.S.C. 434(e)) is amended by redesignating paragraphs (3) and (4) as paragraphs (4) and (5), respectively, and by inserting after paragraph (2) the following new paragraph:

`(3) RECEIPTS AND DISBURSEMENTS FROM QUALIFIED NON-FEDERAL ACCOUNTS- In addition to any other reporting requirement applicable under this Act, a political committee to which section 325(a) applies shall report all receipts and disbursements from a qualified non-Federal account (as defined in section 325(c)).'

SEC. 4. CONSTRUCTION.

No provision of this Act, or amendment made by this Act, shall be construed--

(1) as approving, ratifying, or endorsing a regulation promulgated by the Federal Election Commission,

(2) as establishing, modifying, or otherwise affecting the definition of political organization for purposes of the Internal Revenue Code of 1986, or

(3) as affecting the determination of whether a group organized under section 501(c) of the Internal Revenue Code of 1986 is a political committee under section 301(4) of the Federal Election Campaign Act of 1971.

SEC. 5. JUDICIAL REVIEW.

(a) Special Rules for Actions Brought on Constitutional Grounds- If any action is brought for declaratory or injunctive relief to challenge the constitutionality of any provision of this Act or any amendment made by this Act, the following rules shall apply:

(1) The action shall be filed in the United States District Court for the District of Columbia and shall be heard by a 3-judge court convened pursuant to section 2284 of title 28, United States Code.

(2) A copy of the complaint shall be delivered promptly to the Clerk of the House of Representatives and the Secretary of the Senate.

(3) A final decision in the action shall be reviewable only by appeal directly to the Supreme Court of the United States. Such appeal shall be taken by the filing of a notice of appeal within 10 days, and the filing of a jurisdictional statement within 30 days, of the entry of the final decision.

(4) It shall be the duty of the United States District Court for the District of Columbia and the Supreme Court of the United States to advance on the docket and to expedite to the greatest possible extent the disposition of the action and appeal.

(b) Intervention by Members of Congress- In any action in which the constitutionality of any provision of this Act or any amendment made by this Act is raised (including but not limited to an action described in subsection (a)), any Member of the House of Representatives (including a Delegate or Resident Commissioner to Congress) or Senate shall have the right to intervene either in support of or opposition to the position of a party to the case regarding the constitutionality of the provision or amendment. To avoid duplication of efforts and reduce the burdens placed on the parties to the action, the court in any such action may make such orders as it considers necessary, including orders to require intervenors taking similar positions to file joint papers or to be represented by a single attorney at oral argument.

(c) Challenge by Members of Congress- Any Member of Congress may bring an action, subject to the special rules described in subsection (a), for declaratory or injunctive relief to challenge the constitutionality of any provision of this Act or any amendment made by this Act.

(d) Applicability-

(1) INITIAL CLAIMS- With respect to any action initially filed on or before December 31, 2006, the provisions of subsection (a) shall apply with respect to each action described in such subsection.

(2) SUBSEQUENT ACTIONS- With respect to any action initially filed after December 31, 2006, the provisions of subsection (a) shall not apply to any action described in such subsection unless the person filing such action elects such provisions to apply to the action.

SEC. 6. EFFECTIVE DATE.

The amendments made by this Act shall take effect on the date which is 60 days after the date of the enactment of this Act.

END